What Triggers Corporate Site Visits, and Do Investors Care? A Comparison of Buy-Side and Sell-Side Analyst Site Visits in China

Round 1

Reviewer 1 Report

Referee Report on

A Comparative Study Between Buy-Side and Sell-Side Analysts in Chinese Financial Market

ijfs-2083308

Summary

This paper investigates the factors that cause stock coverage and selection differences between buy-side and sell-side analysts in the Chinese financial market. The author/s report that investors trust buy-side analysts and purchase more shares. On the other hand, investors do not have the same level of confidence in sell-side analysts because they respond to firm visits by sell-side analysts by selling more shares in the firm.

Overall, the idea of the article is fine and the paper has the possibility to contribute to the literature. Yet, I have the following concerns that can be improved. Once they are addressed, the paper could be better presented and the story is well told.

 

Major

 

1.       The purpose and the motivation of the study is not so clear. Authors may invest more in being direct and sharp I their aims.

2.       The Sell-side analysts definition is unclear and should be rewritten (p.1).

3.       Authors may explain in the introduction section how do investors receive access to sell side and buy side recommendations.

4.       There is no literature review to support Hypothesis H1: "Buy-side analysts are more likely to visit firms that are industry leaders than are 169 sell-side analysts".

5.       The literature review overlooks recent and relevant literature. The following 3 articles should be incorporated.

Reiter-Gavish, L., Qadan, M., & Yagil, J. (2022). Investors' personal characteristics and trading decisions under distressed market conditions. Borsa Istanbul Review, 22(2), 240-247.‏ Reiter-Gavish, L., Qadan, M., & Yagil, J. (2021). Financial advice: Who Exactly Follows It?. Research in Economics, 75(3), 244-258.‏ Gavish, L. R., Qadan, M., & Yagil, J. (2021). Net buyers of attention-grabbing stocks? Who exactly are they?. Journal of Behavioral Finance, 22(1), 26-45.‏

6.       Hypothesis H2b: Investors suspect sell-side analysts face an inherent conflict of Interest, so the number of investors decreases with the number of sell-side analysts’ visits to a given firm", Should be explained.

7.       I'm concern with the story about the change in number of shares holding in a certain company being driven by Individual investors “free ride” on institutional investors – I'm not sure this is the case.

8.       This paper uses binomial count model, however the dependent variable is not a count (the number of visits is one of the independent variables). Authors should be clear and use the relevant methods.

9.       Section 5.1 - Elaborate and explain why buy-side analysts focus their visits on industry leaders, while sell side don't.

10.   Line 62 " "Unlike sell-side analysts, the compensation and in fact job security of buy-side analysts is closely linked to the quality of their research". I guess it should be rewritten from the sell side analysts point.

11.   Flow of the paper – the authors should invest more in improving the ideas flowing.

12.   The following should be also improved

-          Discussion of the results

-          Language editing is recommended

-          Possible Future research path

 

 

Author Response

Please see the attachment.

Author Response File: Author Response.pdf

Reviewer 2 Report

The manuscript analyzes the factors determining the number of buy-side and sell-side analyst firm visits in a given year. The topic is interesting, but there are substantial shortcomings as follows:

1.       The authors are encouraged to present the methodology and primary results in the abstract section.

2.       In the first section, the authors should address the importance and the reasons why they investigate the research topic.

3.       In the literature review section, the authors should address the research gaps, which is pivotal in helping readers understand the paper's primary contributions.

4.       For the research data, the authors need to present why they chose the data from 2018 to 2020 and address the representativeness of the research data as well.

5.       The selection of the variables lacks theoretical and literature support.

6.       The authors are recommended to verify the endogeneity and robustness of empirical results. Moreover, the authors should discuss the results compared with extant studies.

7.       The authors are suggested to address limitations in the last section.

8.       The authors are suggested to carefully proofread the manuscript before submission since there are substantial writing mistakes, typos, and the like.

Author Response

Please see the attachment.

Author Response File: Author Response.pdf

Round 2

Reviewer 1 Report

The paper can be accepted.

Author Response

Thank you so much for your suggestion and support.

Reviewer 2 Report

After carefully reviewing the responses and revised manuscript, some comments are addressed, but comments 4 to 6 should be further improved. More specially, the endogeneity and heterogeneity should be verified with econometrics methods. Only offering some simple and subjective discussions are insufficient.

Author Response

Please see the attachment

Author Response File: Author Response.pdf

Round 3

Reviewer 2 Report

After carefully reviewing the responses and revised manuscript, the authors have addressed most of my comments.